From investment to impact: Exploring socio-economic prospect of hydrogen investment in Tees Valley, UK

Financial viability is fundamental for investment success, however, long run sustainable investment relies on delivering tangible socio-economic benefits that foster societal acceptance, enhancing community welfare and well-being. This study developed a quantitative model to evaluate the socio-economic impact of a proposed 1 GW green and 2 GW blue hydrogen investment in Tees Valley, UK, from 2027 to 2035. We introduced the socio-economic impact (SEI) ratio, defined as the ratio of socio-economic impact to the Levelized Cost of Hydrogen (LCOH), to illustrate the significance of socio-economic impact beyond financial returns. Findings indicate that the cumulative environmental and economic impact of green hydrogen amounted to £1.5±0.5 bn, and £1.35±0.27 bn, respectively, with an employment impact of £269±28 mn. In contrast, the proposed blue hydrogen investment is expected to deliver £2.9±0.9 bn environmental impact, £1.84±0.37 bn economic impact, and £212±26 mn employment social impact. The SEI ratio of green hydrogen was found to range between 48%-62%, and 60%-79% for blue hydrogen, suggesting overall SEI ratio of approximately 60% for combined green and blue investment. Sensitivity analysis using Monte Carlo simulation revealed that the results are particularly sensitive to the Gross Value Added (GVA), emission, and employment factors. These findings highlight the importance of integrating socio-economic considerations into hydrogen planning, investment strategies, and decision-making to optimise environmental, societal, and economic outcomes. • Hydrogen investment in Tees Valley can provide £7.9±2.4 bn socio-economic benefit. • Environmental impact will amount by £4.4±1.4bn from 2027-2035. • Economic and employment will contribute by £3.2±1 bn and £481±54mn, respectively. • Socio-economic ratio of green hydrogen will vary between 48%-62% • On average socio-economic impact will cover about 60% of LCOH.